The Budget for Business , Your questions answered by our Experts 

We received so many insightful questions during our Autumn Budget Q&A, that we’ve pulled together a concise summary of the key takeaways at a glance. This roundup highlights the main themes, clarifications, and practical considerations discussed during the session, helping you stay informed and plan your next steps with confidence. 

Explore the key insights below, and remember, our team is always here to answer any further questions. 

The Budget for business in brief 

• EMI/EIS slightly broadened: this is good for companies on a growth or exit path. 

• Income extraction and allowances remain key planning points, unchanged by the Budget, but it is important to review extraction methods particularly the rental income, dividend income or interest income which are part of those extraction strategies. 

• Property investors face more complexity and should reassess structures and income projections. 

• For investors, capital-gain-focused portfolios become even more attractive. 

• Nothing dramatic for sellers, but BADR timing matters. 

• EOTs largely undermined as a viable tax-free exit. 

• Capital allowances changes are relevant to Capital Intensive Businesses within the SME range 

• Pensions still effective, NI changes from 2029 don’t stop contributions. 

• MTD and e-invoicing will materially change compliance processes by 2029, however, the introduction of MTD for quarterly reporting and digital records is a huge change set for 2026 and something you need to prepare for early. 

• HMRC scrutiny rising sharply: data-driven, targeted, less random. 

Your Questions answered 

What’s happening with transitional business rates relief? 

Short answer: Complex changes; outside standard tax planning; many businesses face increases. 

• Covid-era reliefs are being unwound. 

• Hospitality (restaurants/pubs) likely to feel pressure. 

Action points for SMEs: 

• Expect higher business rates in many sectors. 

• Consider using a business rates specialist for appeals/reviews. 

• Reassess cashflow for FY24–25 where rates relief is ending. 

Any changes to the Foreign Income & Gains (FIG) regime? 

Short answer: No. 

• FIG regime remains as previously announced. 

• First 4 years after UK arrival can shelter foreign income/gains if claimed. 

Action points: 

• For new arrivals: consider FIG claims, understanding it removes personal allowance & CGT exemption. 

Should I keep profits in my company or extract them? 

Short answer: Depends on your goals. 

• Retain profits if reinvesting or growing the business. 

• Extract if needed for personal plans (property purchase, etc.). 

• CGT still significantly lower than income tax; capital events remain attractive. 

Action points: 

• If a sale may occur, avoid unnecessary dividend extraction before exit. 

• If retaining profits, consider: 

• Holding company structure for asset protection. 

• Avoid breaching BR thresholds, keep all business assets for a trading purpose: >50% investment income/assets can jeopardise IHT relief. 

Is starting as a partnership/sole trader business now more tax efficient than a company? 

Short answer: Often yes for new small businesses. 

• Dividend increases and narrow tax differences mean incorporation benefits are smaller. 

• Limited liability remains a key non-tax reason to incorporate later. 

• Whilst it may be more tax efficient from commercial perspective there is likely to be more costs involved in running a company particularly with the annual compliance costs so there should other commercial considerations for needing a company before deciding on that as a business structure 

Action points: 

• New businesses: consider starting unincorporated, incorporate when scale or risk profile requires it. 

Are electric vehicles still tax-efficient for company owners? 

Short answer: Yes, they are still attractive despite tweaks. 

• An extra 3p per mile will be charged via the road fund process. 

• EVs remain significantly cheaper as company cars vs non-electric. 

• Salary sacrifice for EVs still works. 

Action points: 

• Limited company owners: EVs remain a tax-efficient benefit-in-kind. 

• Review EV purchase plans but no need to pause due to the Budget. 

• Still viable under salary sacrifice arrangements. 

What is EMI and why does it matter? 

Short answer: A UK-specific, very tax-efficient employee share option scheme. 

Benefits: 

• Employees pay capital gains tax, not income tax, on gains. 

• Can access Business Asset Disposal Relief (BADR) (CGT at 18% from April). 

• Option exercise window extended to 15 years, improving retention. 

• If managed well it also lowers the tax risk for the employees and provides a key benefit for the company in terms of the Part 12 deduction at exercise. If feasible it is often the way to go. 

Action points: 

• Review whether EMI could support your recruitment, retention, and exit planning. 

• For companies nearing size limits, check if the expanded thresholds keep you eligible. 

If I’m planning to sell my business, does the Budget change anything? 

Short answer: Minimal change, but timing matters. 

• No direct Budget change affecting most business sales. 

• Business Asset Disposal Relief (BADR) rate rising from 14% to 18% means some sellers may want to complete this tax year. 

• BUT don’t rush a deal if it weakens commercial value. 

Action points: 

• If sale is already advanced, consider pre-year end completion to secure lower CGT. 

• Reassess EOT transactions: EOT tax relief halved, making many EOT structures much less attractive. 

What’s changed for Employee Ownership Trust (EOT) sales; How can businesses cope with rising wage costs and minimum wage increases? 

Short answer: EOTs now far less tax attractive; Efficiency and pricing should be reviewed. 

• As of Budget Day, EOT disposals are now taxed at half the normal CGT rate. 

• Wage rises hit hospitality, retail, and care sectors are some of the hardest hit. 

• Many EOT deals may no longer be commercially or tax efficient. 

• EOT’s still attractive if the commercial case for general employee ownership can be made. Typically, SME businesses are better suited to an alternative sale structure, such as an MBO, so that there is real skin in the game for the drivers. 

• Cannot use BADR. 

Action points: 

• Review business model and pricing. 

• Look for automation opportunities where possible. 

• Build rising wage costs into forward forecasts. 

• Re-evaluate any EOT-based exit plans. 

• Consider traditional sale routes or MBOs instead. 

Capital expenditure timing; should I delay or accelerate big purchases? 

Short answer: For most SMEs, changes don’t matter much. 

• New main pool rate of WDA will be reducing from 18% to 14% from 1 April 2026 for Corporation Tax and 6 April 2026 for Income Tax. 

• New 40% FYA on leased assets which prior to 1 January 2026 were unable to receive relief under the 100% FYA criteria known as “full expensing” or AIA being unavailable for unincorporated business only. 

• Unincorporated business that has a corporate member (so no access to AIA) or larger business that have utilised the full £1m will benefit. Companies buying assets to lease will benefit from the 40% FYA 

• AIA is still more favourable to full expensing, but a lot of SMEs will not be impacted by the changes. A common example of someone who would be impacted is if they are acquiring cars or assets from a connected party 

• SMEs using full expensing already get 100% relief in the year of purchase. 

Action points: 

• Make decisions based on commercial need, not capital allowance tinkering. 

• Consider timing only if: 

• You’re nearing quarterly instalment thresholds, or 

• You have large brought-forward losses to manage. 

Is this the end of tax increases? 

Short answer: Probably not. 

• Government finances remain tight. 

• Forecasts fluctuate heavily; threshold freezes may return if needed. 

Action points: 

• Expect continued fiscal pressure. 

• Build resilience into budgets and cashflows; avoid relying on tax cuts. 

Making Tax Digital (MTD); what’s new? 

Short answer: Soft landing in year 1, but major changes from 2029. 

• 2026: quarterly digital reporting starts, for incomes over £50,000. 

• 2029: mandatory e-invoicing and quarterly tax payments for those in self-assessment. 

Action points: 

• Move to cloud accounting now. 

• Review invoicing systems for future e-invoice requirements between businesses. 

• The introduction of MTD for quarterly reporting and digital records is a huge change set for 2026 and something you need to prepare for early. 

Should people plan now for forward-dated tax changes (2026–2029)? 

Short answer: Plan using what we know today; avoid overreacting to future proposals. 

• Many changes (e.g., pension salary-sacrifice restrictions in 2029) may evolve with a new government. 

• Some changes (dividend rate changes, EV benefit changes) are closer and may require planning. 

Action points: 

• Prioritise planning for 2026–2027 confirmed changes (for example capital tax changes), over changes coming later (e.g., pensions in IHT). 

• For long-term proposals (2029 salary sacrifice), wait and see before restructuring. 

• Review the timing of dividend extraction before upcoming rate changes. 

Tax on overseas income; do I pay UK tax if I’ve paid tax abroad? 

Short answer: Usually you will receive a credit for the lower of the UK or overseas tax however there are other methods of foreign tax relief, and this is subject to the double taxation treaty with the UK and both UK and overseas residency positions. 

• Double Tax Treaties determine which country has taxing rights. 

• You get a credit for lower of UK vs overseas tax. 

Action points: 

• Ensure correct foreign tax credit claims. 

• Review residency position annually. 

What are the new rules surrounding ‘incorporation relief’? 

Short answer: We recommend seeking advice from a Chartered Tax Advisor, at Burgess Hodgson.  

• Incorporation relief remains available, but it must now be actively claimed via the tax return it is no longer automatic. 

• Business Asset Disposal Relief (BADR) and Investor’s Relief continue to exist, but their availability depends heavily on personal circumstances, qualifying conditions, and future changes in legislation. 

• Incorporation can still be beneficial as a business grows, but suitability varies case-by-case. 

Action Points: 

• Speak to a trusted CTA.  

• For new businesses expecting to start small: It may be worth considering remaining unincorporated initially, depending on growth plans, expected profits, and administrative load. 

• When incorporating: Ensure you work with professional advisers so that incorporation relief is claimed correctly, and the wider tax implications are fully understood. 

• Financial planning: Individuals may wish to consult a regulated financial adviser to ensure investment and retirement strategies remain aligned with the new tax environment. 

Are HMRC compliance checks increasing? 

Short answer: Yes, significantly. 

• More data-driven enquiries, enabling a tax demand, rather than questioning (land registry, online platforms, insurance, etc.). 

• Rise in “one-to-many” letters. 

• New whistleblower reward regime (30% of tax recovered >£1.5m). 

Action points: 

• Ensure records are accurate and consistent with digital footprints. 

• Review any claims (e.g., BADR) for defensibility. 

• Check compliance with new Making Tax Digital scheme.  

What about the new ‘mansion tax’? 

Short answer: Watered down, but likely the start of wider council tax reform. 

• Requires revaluation of properties above £2m. 

• May open the door to broader council tax band changes in future. 

Action points: 

• Expect future property tax reforms. 

• High-value property owners should monitor developments. 

Is the new ‘property income tax’ based on net profit? 

Short answer: Yes. 

For context, this relates to rental income as opposed to income for property development. 

It is a profit-based tax, with rental losses still available to offset. 

Important: New “ordering rules” prevent you from applying personal allowance against the highest tax band to game the system. 

Action points: 

• Re-model rental income with the new ordering rules. 

• Ensure the carried-forward rental losses are correctly tracked. 

Can landlords or savers choose which income is taxed first? 

Short answer: No. 

Tax ordering is now fixed in legislation. 

Action point: 

• Update tax cash-flow forecasts to reflect the enforced income ordering. 

Advice for higher-rate savers and landlords who can’t incorporate: 

Short answer: Shift focus on capital gains rather than income distributions. 

Why: 

• CGT at 24% vs significantly higher savings/dividend rates. 

Action points: 

• Ask investment managers to prioritise capital growth strategies over income-generating products. 

• Explore tax-efficient wrappers that bias toward CGT rather than dividend/savings income. 

• Review portfolio structure given the wider gap between CGT and dividend rates. 

Should I incorporate my rental portfolio? 

Short answer: It depends, it is highly case-specific. 

Variables to consider: 

• Are you buying new properties or holding existing ones? 

• Intention to sell vs pass down through generations? 

• Current ownership structure (individual, partnership, etc.)? 

Action points: 

• Seek tailored advice on: 

• Family Investment Company structures 

• Long-term succession plans 

• Transaction costs and CGT on incorporation 

Does this Budget change my inheritance tax (IHT) planning? 

Short answer: Not much. 

• The existing £1m allowance is now transferable between spouses/civil partners (helpful but could previously be planned via wills), this means that you can still access the potential £3m allowance. 

• Farmer’s IHT still at 50%. 

• Broader IHT changes from last year (notably for pensions/business assets) still apply from 2026. 

Action points: 

• Review existing wills to ensure allowances are used efficiently. 

• Continue IHT planning, changes remain forward dated, so don’t wait until 2026. 

• Focus on your genuine succession/retirement objectives, rather than planning purely around speculation. 

How should owner-managers structure salary, dividends, and pensions now? 

Short answer: Differences between salary vs dividend vs profit share are now much narrower. 

• Historically “small salary and dividends” was best. 

• Now the gap is minimal, and decisions are more situational. 

Action points: 

• Make remuneration decisions case by case, considering: 

• Personal income thresholds: £50k, £100k taper thresholds. 

• Corporation tax effects (e.g., can salary reduce profits into the 19% band?). 

• Quarterly instalments avoidance for larger groups. 

• New businesses: partnerships/LLPs may often be more efficient than companies initially. 

Are pensions still useful for directors and owner-managers? 

Short answer: Yes, for retirement planning, but no longer an IHT strategy after 2027. 

• Salary sacrifices still available but restricted to saving £2,000 NI. 

• £60,000 annual allowance remains unchanged. 

Action points: 

• Continue pension use for retirement funding, instead of using it to reduce exposure to IHT.  

• Salary sacrifice still works; especially to manage: 

• £100,000 personal allowance taper, and 

• Eligibility for Tax-Free Childcare (lost at £100k). 

• Expect fewer major pension pots due to future IHT treatment. 

Can I still carry forward pension allowance after 2029? 

Short answer: Yes, this policy was left unchanged. 

• 60k allowance and 3-year carry forward remain. 

Should I reduce pension contributions because of new tax rules? 

Short answer: No. 

• Only change is the salary sacrifice NI relief capped at £2,000 from 2029. 

• Higher-rate tax relief remains. 

• No changes to pension tax treatment on retirement. 

Action points: 

• Continue contributions as part of retirement planning. 

• Use contributions strategically to stay below the £100k taper cliff or preserve Tax-Free Childcare. 

Were there any positives in the Budget? 

Short answer: A few but limited. 

Detail: Slight relaxations to EIS (Enterprise Investment Scheme) and EMI (Enterprise Management Incentive) schemes, mainly benefiting slightly larger companies who can now qualify. 

Action points for SMEs: 

• If planning team incentivisation or pre-exit alignment, reassess whether EMI/EIS is now viable. 

• Consider EMI as a tool for retention and motivating growth, especially if planning an exit in around 5 years. 

 
Any immediate actions post-Budget? 

Short answer: Mostly business-as-usual tax housekeeping. 

No major structural changes requiring urgent behaviour shifts. 

Action points: 

• Review income extraction strategy before year-end (salary vs dividends). 

• Watch the income thresholds: £100k (personal allowance taper) and £60k (child benefit). 

• Continue inheritance tax planning. 

• Consider dividend timing but nothing “Budget-specific” changes the usual logic. 

How should young people save for the future? 

Short answer: ISAs remain the simplest and safest route. 

• System is messy (Lifetime ISA, Help to Buy ISA), but core approach unchanged. 

Action points: 

• Encourage early saving via cash or stocks & shares ISAs.